Dhaka stock market crash
Bangladeshi investors shout slogans as they protest in Dhaka on Jan. Nobody in Hafizur Rahman's family asked too many questions when the money they sent home to Bangladesh doubled or even tripled within two to three months.
So when Sabur was told last May that his year-old brother-in-law died suddenly of a heart attack, he was shocked. Shocking, too, was the discovery that the tens of thousands of dollars sent to Rahman by relatives in Europe and North America was largely gone. The funds that they planned to use to buy retirement homes for relatives in the southern port city of Khulna had disappeared in Bangladesh's volatile stock market.
Although Bangladesh has seen booms and busts before during its stock exchange's year history, the steep losses suffered over the past 12 months by millions of small investors threaten to bring fresh economic and political turmoil to a long-suffering nation that seemed, at last, to be gaining ground.
Watch TIME's video "Fleeing Catastrophe, Stuck in the Slums of Bangladesh. Between and '11 Bangladesh's booming garment industry fueled average economic growth of 6. In , Goldman Sachs included Bangladesh among the "Next 11" rapidly emerging economies to succeed Brazil, Russia, India and China. Morgan followed suit in , including Bangladesh in its "Frontier Five" markets.
So what went wrong? The country's growth spurt was fueled by the garment industry, where some 2. Polo shirts and blue jeans were paired with another fast-growing export from Bangladesh: Coupled with the earnings from garment exports, that cash flooded into more than three dozen banks across the country, many of which were newly licensed, small and unprofessionally managed.
As inflation crept up and more banks entered the marketplace, the pressure to generate higher returns for depositors mounted. That, in turn, turned banks into stock-market players. The central bank allowed banks to invest a tenth of their total liabilities in the market. Read "Strike Divides Dhaka as Unrest Deepens. As banks poured money into stocks, the market rocketed skyward.
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Such heady gains fed a hunger for investing among small-time players, even among those who knew little about the stocks they were trading. According to AT Capital's Islam, retail brokerage accounts in Bangladesh jumped sevenfold from roughly half a million in to 3. Unsurprisingly, the bubble soon burst.
Alarmed, the central bank began tightening, in part by proposing stricter limits on banks investing in the market.
That became the trigger of a punishing one-year-old market decline that's wiped out all the gains of and is now threatening to widen into a more serious economic and political crisis. As Europe's demand for garments slows and fewer Bangladeshis find work abroad, the country has begun to run a current account deficit. That is eroding the value of the Bangladeshi taka, which has dropped by roughly a fifth against the dollar over the past two years and is accelerating the market's slide.
Worryingly, high food prices are stoking public anger against the government Sheikh Hasina. Over the past year, groups of disgruntled investors have been regularly gathering outside the stock exchange's Dhaka headquarters to burn tires and protest, venting their frustration with a regime they feel has not taken adequate steps to curb market speculation and protect small investors.
Last April, a committee led by Khondkar Ibrahim Khaled, a respected former banker, submitted an official report to the government that alleged extensive market manipulation prior to the initial Jan.
Read "Behind Bangladesh's Failed Coup Plot: A History of Violence. Decades of steady economic progress won't be necessarily unraveled by a market rout alone. Analysts say the country's larger banks are solvent enough to continue lending to companies and individuals, albeit at double-digit interest rates.
Even so, to small investors like Sabur's late brother-in-law, hitching his fortunes to a roller-coaster market was a devastating ordeal. Read "Bangladesh's 'Banker to the Poor' Faces a Political Battle to Survive.
Watch TIME's video "Creating New Land for Climate Refugees in Bangladesh. MY ACCOUNT SIGN IN SIGN OUT SUBSCRIBE SUBSCRIBE. Politics World Business Tech Health Motto Entertainment Science Newsfeed Living Sports History The TIME Vault Magazine Ideas Parents TIME Labs.
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Dhaka Stock Market Crash | MD. ZABER TAUHID ABIR - irexapezoren.web.fc2.com
Subscribe Newsletters Feedback Privacy Policy Your California Privacy Rights Terms of Use Ad Choices. The Rise and Fall of One of the World's Worst-Performing Stock Markets By Neel Chowdhury Thursday, Feb. Related Behind Bangladesh's Failed Coup Plot: A History of Violence Fleeing Catastrophe, Stuck in the Slums of Bangladesh.
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